The legendary Wall Street law firm was built on advising companies in duress. Then it was forced to turn its expertise on itself.
By Erin Mulvaney, Cara Lombardo, Corinne Ramey and Jasmine Li
When new hires at Weil, Gotshal & Manges gathered for orientation last week, senior lawyers at the legendary Wall Street firm -- which burnished its reputation by leading mega-bankruptcies at Enron and Lehman Brothers -- spoke of plans for a long and successful future.
Nine days later, at 3:30 p.m. on Wednesday, senior partners gathered everyone again. This time, they had a different message: the 95-year-old firm was shutting down.
"Given the significant partner departures, resulting loss of revenue and other disruptions, and after careful consideration of the alternatives, we have reached the heartbreaking conclusion that we must recommend an orderly dissolution of Weil, Gotshal & Manges," said Barry Wolf, the firm's leader, according to a video of the call reviewed by The Wall Street Journal. "This is not a recommendation we ever imagined making."
A rapid chain of events had led to a once-unthinkable outcome: The collapse virtually overnight of a venerated and profitable law firm with some 1,200 attorneys worldwide and more than $2 billion in revenue. Late last week, when merger talks collapsed and another slew of top partners chose to leave the firm, the writing was on the wall. Just five days later, Weil's downfall was complete.
The idea that a run on top talent could take down even a leading firm in a matter of weeks has sent a shudder across the legal industry.
"It's almost impossible to believe," said one retired Weil partner of three decades. "But the run on the bank came, and the bank has to close."
Weil, the firm that invented much of modern bankruptcy practice and spent years as a go-to adviser for corporations under duress, turned that expertise on itself. It is now working with restructuring advisers of its own and figuring out how to engineer the kind of wind down it has done for clients for nearly a century since it was founded by top Jewish lawyers excluded from other elite shops.
This is a year of extraordinary turbulence in the legal industry. This summer six Wachtell lawyers, including one of the firm's co-chairs, left the firm that until 2020 had lost only one partner to a rival in more than half a century. Last year saw a record number of partner exits from top firms and this year is on track to top that, according to data firm SurePoint Technologies.
Already lawyers at Weil and across the industry are autopsying the firm's collapse, which can be traced to a failure to adapt quickly enough to a rapidly changing industry that demanded scale and cutthroat recruitment -- and to the bitter leadership clashes that ensued as the firm debated its future.
In a Weil podcast interview earlier this year, Ramona Nee, the firm's incoming chair who would eventually step aside as the firm unraveled, said, "We have to constantly be vigilant and constantly be looking around corners and constantly making sure that we're taking care of our people in a way that makes them want to stay."
Some people internally and externally blame its longtime leader, Wolf, for failing to make the same decisive moves as rivals such as Kirkland & Ellis and Paul Weiss, including reinvesting profits from the financial crisis to poach top talent. Wolf, 66 years old, eschewed client work for years once he took over running the firm in 2010.
Others lay the blame with Michael Aiello, the firm's top dealmaker and a polarizing figure who some say made it harder to recruit for other practice groups that might create conflicts with his work. The actions of Weil's management committee as it fought for survival are also under the microscope, including a last-minute attempt to merge with Willkie Farr & Gallagher that some partners say backfired and hurried top people toward the exits.
What is clear is that the firm was financially healthy. It was among the 20 most profitable firms in the industry, and the firm has well more than $1 billion receivables and work in progress that has yet to be paid.
It was Harvey Miller, the 14th partner at Weil, who staked its claim on bankruptcy at a time when other big firms dismissed the practice as lesser work.
Weil's adversaries nicknamed the firm "We'll Getcha & Mangle Ya," for its aggressive -- and successful -- tactics. Inside, the firm had hardworking lawyers and a good vibe, said John A. E. Pottow, a law professor at the University of Michigan who worked as a bankruptcy lawyer at Weil in the early 2000s. When a case closed, lawyers would celebrate at a bowling alley.
Last year, its restructuring team landed a lead role on the bankruptcy of auto supplier First Brands, work that would bring in roughly $160 million in legal fees and be among the most lucrative bankruptcy assignments of the year, a recent filing shows. Its mergers and acquisitions practice, which fell under Aiello's purview, was also humming along, advising on big deals for Home Depot and Sunoco.
But beneath the surface, cracks were forming.
Aiello, who led the 600-person corporate practice, was seen by many as Wolf's shadow leader. Wolf and Aiello were the two best-paid partners at the firm, earning north of $20 million a year each. Their fortunes were linked: the size of Wolf's paycheck was due to a unique provision ensuring that as the firm's leader he was paid the same as the highest-earning partner each year.
About a year ago, Aiello and Wolf quietly began calling rivals to explore a merger to compete with the giant global firms. Among the potential targets they called was Houston-based Vinson & Elkins, a firm with strong energy practice in Texas where Weil had been struggling to attract talent.
The talks didn't move forward.
As Wolf neared the firm's mandatory retirement age of 68, he created a committee with a handful of people to select his replacement. The committee landed on Nee, a successful private-equity partner based in Boston. After a vote by the firm's leadership, it announced in March that she would take over in January 2027. She won partners' support by championing a remaking of Weil that would bulk up in practice areas including private equity to help it better compete with behemoths like Latham & Watkins and Kirkland & Ellis.
One glaring issue with that plan was that many of Weil's competitors had already laid the groundwork for similar expansions years earlier.
Aiello began quietly telling those close to him that he was unhappy and wanted the firm to maintain its tightknit culture, rather than adding lawyers without a clear plan. Meanwhile, other partners who decided to leave criticized Aiello for not giving space for the firm to grow and have a better shot at competing.
By the summer, many of Weil's highest-producing partners were holding talks to leave for competitors. Christopher Machera, a member of Weil's management committee, and Brian Parness, a private-equity partner, left for Paul Weiss and Simpson Thacher & Bartlett, respectively.
Only weeks after those big partner losses, Weil faced its biggest: Aiello stunned his longtime close friend Wolf by telling him he was leaving for a rival white-shoe firm Cravath, Swaine & Moore -- and taking five M&A partners with him. Aiello broke the news to Wolf in early September shortly before Rosh Hashana. It was the last time the longtime friends spoke.
It was a watershed moment. Weil was now without its largest revenue generator and his prized M&A practice.
Soon after, Nee told the management committee that she no longer wanted to lead the firm. Some partners at the firm said Wolf wasn't giving her an opportunity to lead, while negative press about partners leaving was reflecting poorly on her.
At management committee meetings, the group's own ranks dwindled. Those still there debated how to stabilize the firm. Efforts to find a merger accelerated. Some firms reached out to Weil, while the firm sought partners.
On Oct. 20, Weil told partners that the firm was in talks with a merger partner it didn't identify. The legal world lit up with a guessing game of potential tie-ups.
When some partners learned that Weil was talking about a merger with Willkie, many chafed at the possible combination, according to people familiar with the matter. Four more partners told leadership they were leaving, including two more members of the management committee.
Talks with Willkie fell apart late last Thursday, and there were no other contenders.
The firm leaders received notice from several large practice groups that they intended to leave. Management committee members met throughout the weekend. They phoned restructuring lawyers and, on Tuesday, brought in a top bankruptcy lawyer from Davis Polk. Some partners began encouraging their associates to find other jobs.
Late Wednesday afternoon, employees were invited to a firmwide meeting. Wolf appeared on camera from the firm's midtown office, flanked by the remaining members of the management committee, including his onetime would-be replacement, Nee.
In brief remarks, he said management was recommending a dissolution and that a partner vote would be forthcoming.
The firm plans to dissolve without filing for bankruptcy. Outstanding client payments will be collected and the accounts settled. Among the firm's biggest liabilities is a roughly 380,000-square-foot lease at the General Motors Building across from Central Park in New York.
The firm, in a statement, said as the process unfolds, it "will continue serving clients with the dedication and excellence that have defined it since its founding and will remain committed to supporting its colleagues."
At the firm's New York office Wednesday, lawyers poured bottles of scotch and Champagne they'd been saving to celebrate promotions and deal closings into paper cups.